Betting Exchanges Are Changing Sports Gambling Forever

As the world grows ever more connected, we are seeing the elimination of sluggish, inefficient remnants of the past fade away which today continue to limit those who are poorly versed in technology. We set it with credit applications in fintech, we see it with cryptocurrency able to be exchanged directly between private wallets, and we are seeing it on AI-controlled platforms now cutting out the bookmaker since the year 2000. 

Until the 21st century, whenever people wanted to make a bet, they had to go to a bookmaker. That outfit decided itself what bets it would offer and people had to either take it or leave it. They left themselves a little advantage called a “vig”, a small percentage that the bettor had to pay on top, win or lose. This is still a popular option, but the betting exchanges are edging them out slowly, by allowing the market itself to determine the betting lines, based on people putting down their money where their mouth is.

Betfair, a betting exchange titan, even paraded through London announcing “Death to the Bookmaker”. Now we dive into how such platforms are bringing about just that.

What Is a Betting Exchange?

These are like online marketplaces whose values are determined by the players, much like the stock market works. Players have the option of back bets – wagering that a team will win, and lay bets – betting specifically that a team will lose, a negative outcome. This ramps up the possibilities that players have to bet on. Finally, ordinary players can profit not only from predicting winners but also for accurately spotting overhyped teams.

The player logs onto a platform like Odds96, they are displayed a ladder of prices rather than just one fixed price. They see a list of the best available odds but also odds further down the line along with the amount available at each price.

For example:

This view immediately tells players how competitive the market is and how much liquidity is available. They also get to enter with their own odds if they don’t like the current ones. In this case, they also enjoy the advantage of betting against the public, mostly consisting of casual fans, rather than a bookmaker who does nothing all week but watch sports for their careers.

Advantages That Betting Exchanges Bring

People are able to reap better value through sharper odds, breaking free of the frigidity of bookmakers. The odds are closer to the true market probability since they’re not fixed consciously by a profit-seeking organization. Even a few extra points in a game can make all the difference in a bet.

Players who are seeking gaps in the betting market where odds have failed to adjust or are naively unaware of the outcome that’s coming can take advantage of those situations. If they learn first that a star player is injured, they can take advantage and place a bet before the odds on betting exchanges have time to react. Order books can indicate the liquidity of a market too. 

Bettors can also back one price and lay another to lock in profits, similar to trading stock. Before a match starts, the gambler can back a team at 3.00 and then lay them during the game after they’ve shifted at 2.50, securing a profit no matter what.

Downsides

Not everything is looking up though, since niche sports and random betting scenarios are very difficult to find on betting exchanges. Without enough money in the market, players may struggle to get their bets matched at a good price. You might be able to place a quick wager on table tennis. You also have a lot to learn to get the hang of these platforms, which is bad news for those averse to technologies. It’s much quicker for a lot of people just to call a bookie. On top of that, peer-to-peer betting exchanges are not yet legalized in some countries.

Impact

This has really disrupted the foundations of sports gambling businesses. Betting exchanges are taking away bookmakers’ built in edge, since gamblers can opt for better odds on exchanges anyway. So they have less leverage. Bookmakers are now being pressured to innovate. They’re offering cash-out features and expanding live betting options to stay afloat. Many of these wouldn’t have existed at all though if it weren’t for the betting exchange.

The learning that betting exchanges require are rendering casual players not so casual anymore either. Bookmakers are now, however, versing themselves much better in less popular sports since that’s where they still dominate and offer extended props in now. Nevertheless, bookmakers are finding themselves increasingly marginalized. They could end up being relegated to serving casual fans while betting exchanges absorb the serious bettors and the professionals.

The Future of Betting

There are so many directions that sports betting can take thanks to exchanges. Smart contracts are adding so much security by self-executing bets, without any chance of a player skipping out. Things are very secure, transparent, and you can place them no matter where you are, as long as it’s legal where you live. We are likely to see fees dwindle smaller and smaller too.

Convenient Precision

In the future, people will continue to use mobile apps primarily for betting worldwide, and apps will update odds by the second and players will be able to enter or exit positions with a swipe. They will also grow ever more simple going forward so people will be less ambivalent about trying them out. So more casual bettors will get involved.

Machine Learning

More and more sophisticated ways of analyzing markets will keep cropping up. Real-time data from the sophisticated wealth of data sensors and processors will spit out astonishing props and will make predictive analytics much easier. AI assistants will help recommend people bets in line with their habits and favorite props. They can help tip people off on where the best value bets lie too.

Global Involvement

Since smartphones are spreading rapidly, as is revolutionary 5G technology, people in rural areas, Asia, Africa, and Latin America will pour into these apps way more than before, and minor leagues even in these countries will be offered for betting. We are also currently seeing a liberalization in government policy toward online betting, slowly but surely.

Betting Exchange Leaders

Several major exchanges are in charge of spearheading these innovations who now dominate the industry.

Betfair

These guys have dominated the beginning and still sit at the top. They innovated a cashout feature which allowed bettors to lock in profits or cut losses mid-event, which was later copied. Advanced users can also use algorithmic betting.

Smarkets

They stand out with low commissions, as low as 2%. It’s first and foremost a tech company it claims, and a betting company second. Its design is minimalist so that it appears less intimidating. You can make a large number of political bets here too.

Matchbook

This exchange offers high volume and low margin. It focuses mainly on the big four US sports leagues and offers forums and content aimed at educating players to warm them up to using betting exchanges.